The cost of living in the U.S. was unchanged in April as decreases in food and energy costs countered increases in medical care, autos and a second straight jump in tobacco prices. The consumer price index held steady after decreasing 0.1 percent decrease in March, the Labor Department said today in Washington. Excluding food and fuel, costs climbed a greater-than- forecast 0.3 percent, almost half of which reflected an increase in excise taxes on cigarettes, according to Labor. Companies from Gap Inc. to Toyota Motor Corp. are keeping a lid on prices to draw buyers amid the deepest recession in five decades. Still, recent increases in commodity costs and Federal Reserve efforts to thaw credit markets by pumping trillions of dollars into the economy will help lower the odds that broad- based price declines, or deflation, will take root. ``Demand simply remains too weak for most businesses to find any success in pushing through price hikes at this point, Russell Price, a senior economist at Ameriprise Advisor Services in Detroit, said before the report. ``Widespread price cuts however, are also unlikely especially given the recent evidence that the economy may be stabilizing.'' From a year ago, consumer prices fell 0.7 percent, the biggest decline since 1955. Excluding food and energy, prices climbed 1.9 percent from April 2008. Consumer prices in the month were forecast to be unchanged, according to the median estimate of 71 economists in a Bloomberg News survey. Projections ranged from a drop of 0.1 percent to a gain of 0.3 percent. Costs excluding food and energy were expected to rise 0.1 percent. Last month's increase was the biggest since July. Energy, Food Energy costs fell 2.4 percent in April, led by decreases in gasoline and natural gas. Food prices dropped 0.2 percent as costs for dairy products and non-alcoholic beverages fell. The CPI is the broadest of three monthly price gauges from Labor because it includes goods and services. Almost 60 percent of the CPI covers prices consumers pay for services ranging from medical visits to airline fares and movie tickets. New vehicle prices and medical care costs both climbed 0.4 percent, while tobacco jumped 9.3 percent. A category designed to track rental prices increased 0.1 percent after increasing 0.2 percent in March. Wages increased 0.1 percent after adjusting for inflation, and were up 2.6 percent over the last 12 months, matching the year-over-year increase in March. Auto Incentives Increase in vehicle prices may not last much longer. Automobile makers are among companies cutting prices or increasing incentives in a bid to revive plunging demand. Toyota Motor Corp., the world's largest automaker, last month cut the base price of its Prius hybrid by $1,000 to help beat back competition from Honda Motor Co.'s gasoline-electric Insight. Honda started selling the new Insight on March 24 with a sticker price starting at $19,800, less than the $22,000 for the current base-model Prius. Toyota will offer a 2010 Prius for $21,000 later this year, after higher-priced versions debut in late May, according to a Toyota statement last month. Several retailers offered promotions during April. Aeropostale was offering two tank-tops for the price of one and half-price swimwear. Gap Inc.'s Banana Republic chain advertised 50 percent off accessories, while American Eagle Outfitters Inc. promoted shorts for less than $25. Still, smaller declines in manufacturing and an easing in the housing slump indicate the worst recession in at least 50 years may be starting to abate. Recession Abating The economy will probably shrink at a 1.9 percent annual pace this quarter after contracting at an average 6.2 percent rate in the prior six months, according to economists surveyed this month. Federal Reserve Chairman Ben S. Bernanke said May 11 that the danger of deflation, or prolonged declines in consumer prices, is ``receding.''

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